The Construction Industry Is Finally Embracing Technology

AT THE BUILD SITE for One Dalton, a 61-story luxury residential tower rising over Boston’s Back Bay, you’ll find all the trappings of a major construction site: hard-hatted tradespeople in neon vests, the steady din of diesel delivery trucks, a massive hoist moving tools and materials along an unfinished facade.

One thing you won’t see much of is paper.

The once-ubiquitous sheaves of oversize design drawings and blueprints that typically litter every flat surface on any job site have vanished, replaced by tablet computers and smartphone apps—some of which are even made by Suffolk Construction, the Boston-based builder developing One Dalton.

For just about any other industry, a shift from the physical to the digital would come off as passé in 2018. For a $10 trillion global construction industry playing technological catch-up, it’s proving downright revolutionary. The global engineering and construction sector holds the dual distinctions of being one of the world’s largest industries—yet one of its least efficient. By some accounts, construction projects regularly lose up to a third of their value to waste. Productivity growth in the industry has averaged just 1% each year over the past two decades, compared with a 2.8% growth rate for the global economy as a whole, according to McKinsey & Co.

Measure twice, construct once: Utah’s Layton Construction has embraced tech as a way to get the work done faster and leverage untapped opportunity at the job site.

Lindsay Daniels­—Layton Construction

“The industry never really invested in tech or IT,” says Steffen Fuchs, a McKinsey partner who specializes in capital productivity. “So it’s been operating the same way since the 1940s.”

To close the gap—and grab a piece of the $1.6 trillion in cost savings the industry could realize if it brings its productivity in line with other sectors—construction companies are (finally) leveraging technologies like artificial intelligence, cloud-based data analytics, and mobile computing to drive efficiency and boost margins. And for the first time, the tech industry is showing up at the job site with the right tools. Since 2013, construction technology received more than $18 billion in cumulative investment, according to McKinsey. Silicon Valley software giants in particular have gone on a construction-tech spending spree. In February, Oracle acquired Aconex for $1.2 billion (after spending about half that for Textura in 2016); in April, global positioning giant Trimble snapped up Viewpoint for $1.2 billion; and in July, Autodesk acquired Assemble Systems for an undisclosed sum.

Autodesk can claim some credit for sparking the shift through its push into building information modeling. BIM, as it’s known, broadly refers to the use of three-dimensional digital models rather than 2D blueprints to represent buildings and structures. Prior to BIM, architectural drawings told builders what a structure should look like but not how it should be built—a disconnect that long forced builders to devise bespoke construction solutions on the job site. “Instead of reverse-engineering a project, as was done traditionally, we now have a seat at the table in the design process,” says John Cannistraro Jr., who runs a mechanical construction firm based in Watertown, Mass.

What’s more, BIM has enabled the collection and storage—in a digital format—of the massive troves of project data that are now at the core of the industry’s digital transformation. Technology companies are mining that data for insights that could boost the efficiency of both current and future projects by beaming actionable, real-time information directly to builders’ mobile devices.

Observers believe the construction industry’s ongoing digitization has the potential to reshape not just an industry but also the entire built world, the term for all humanmade surroundings. “In a lot of industries [technology companies] are replatforming existing technologies,” says Koji Ikeda, an equity research analyst at Oppenheimer & Co. “In construction they’re not just replatforming legacy technologies but the way the industry does business.”

Look no further than One Dalton, which topped out in August. “We were, from a design perspective, way behind on this,” says Jim Grossmann, Suffolk’s national director of construction operations. “And the only way we got caught up was through these technologies.”

It’s difficult to account for the building that never got built or the costly mistake that was never made, but the industry is coming around. “Construction is going to be our next billion dollar business,” says Autodesk CEO Andrew Anagnost. “There’s no doubt about it.”

A version of this article appears in the October 1, 2018 issue of Fortune with the headline “Building With Bits And Bytes.”

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